U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15667 / March 11, 1998
SECURITIES AND EXCHANGE COMMISSION v. ROB NITE; PHILIP L. THOMAS; DAVID V.
SIMS, Civil Action No. 97-6546 DDP (RZx) (C.D. Cal)
On March 2, 1998, the District Court for the Central District of California
entered final judgments of permanent injunction and other relief against
Philip L. Thomas and David V. Sims prohibiting future violations of the
antifraud provisions of Section 17 (a) of the Securities Act of 1933 and
Section 10 (b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder. Thomas and Sims consented, without admitting or denying the
allegations in the complaint filed by the Securities and Exchange
Commission, to the permanent injunctions enjoining them from future
violations of the federal securities laws. The Commission waived payment
of disgorgement and prejudgment interest, and did not assess civil
penalties, based upon Thomas s and Sims s demonstrated inability to pay.
Litigation is still pending against Rob Nite, the sole remaining defendant,
who is currently incarcerated in federal prison on charges unrelated to the
Commission s action.
On September 3, 1997, the Commission filed the complaint in federal
district court in Los Angeles against Nite, Thomas and Sims alleging that
they conducted a multi-million dollar fraudulent investment scheme
involving the fictional trading of securities purportedly issued by major
international banks. The Commission s complaint alleged that from July
1994 through October 1994, the defendants, Nite, age 47, Thomas, age 43
and Sims, age 47, offered and sold to the public interests in a phony
program to trade these purported securities, amassing approximately $3.7
million. For their investment, the victims were promised astronomical
returns on relatively small investments. Specifically, the complaint
alleges that the defendants guaranteed the victims that for an initial
investment of either $50,000 or $150,000, they would receive returns of $1
million per week for 40 weeks, or $40 million. Contrary to their promises,
the defendants did not invest the victims funds, but instead
misappropriated the funds for their own personal benefit, including
donations to religious organizations, purchases of luxury automobiles and
gifts to family members.
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